The hallmark of anti-intellectualism is to insist something is far simpler than they've been told, dismantle it and then find out why it was the way it was.
If you're an engineer, you've experienced something similar. You come across some code and scratch your head thinking "why did they do it like this?", spend half a day getting rid of it and then find out why it was the way it was.
There are people who understand all these complex systems. We just insist on silencing them, even firing them and then listening to the dumbest people on the planet.
You see this in startups too, even very large ones. I've now spent years watching people in crypto discover why exactly the financial system works like it does while spewing banalities about "disruption". Sometimes new thinking can be good but more often than not it's somewhere between ignorance and a scam, particularly when so much money is involved.
Another classic example: orbital data centers.
It doesn't have to be that way. The Chinese Communist Party is, despite the name, technocratic [1]. Xi Jinping's undergraduate degree is in chemical engineering.
Nate Hagens [1] often talks about a wider-boundary view and nth-order effects. I find it both informative and enlightening as well as thought-provoking.
Can't someone take all possessions of Trump, Hegseth etc... and redistribute this to middle and lower class folks? I fail to see why I have to pay for increasing prices due to the actions of those guys. This is literally a racketeering scheme for milking us via increase of prices. A few get very rich, just as Smedley Butler pointed out many decades ago - even he would be shocked at the level of milking going on here.
>The net worth of Donald Trump, the 45th and 47th president of the United States, is not publicly known. For decades, Forbes has assessed his wealth, currently estimating it at $6.5 billion as of February 2026.[1][2]
The funny thing is that we don't need to speculate about many of the effects of this because it's already happened but nobody really paid attention to it. I am talking about the Trump 2020 OPEC deal.
First, some context. OPEC/OPEC+ generally set their production to meet demand and to keep oil prices stable. That means they aim for a floor and ceiling on oil prices. Every 3 months they meet and try and anticipate demand. Produce too much and the price is too low. This hurts revenue. Produce not enough and it creates political instabilities, both locally and abroad. It would in particular hurt security guarantees with the US that go back to FDR and King Faisal making an oil-for-security deal in 1945. Now, that doens't mean OPEC members can't and don't cheat. They can and do. But it is generally successful [1].
In January-February 2020 we had the start of the pandemic. A lot of people weren't paying attention or thought it could be contained. That was over by March 2020 and much of the world went into lockdown. A lot of travel just stopped. This had an immediate effect on the oil market. Nobody was buying. Nobody had places to store excess oil. Russia and Saudi Arabia got into an oil price war. And the futures price briefly went negative [2]. This technically was an extreme contango market [3].
So what did the Trump administration do? Well, in my estimation, they panicked. They feared this would be devastating to US oil producers. So then-president Trump went to MBS and cajoled him into getting OPEC to massively cut oil production [4][5]. How much? Initially by 9.7 million barrels per day and then going down over the next 2 years to 6.3 million. That's roughly 10% of global crude oil output.
When I say "panicked", because of the OPEC meetings every 3 months, this would've happened anyway. OPEC would've cut production. The market would've stabilized. Instead, Trump locked OPEC into a 2 year cut and essentially gave them permission to drive up oil prices. And that's exactly what happened. This deal maps pretty much exactly to the pandemic inflation spike.
And nobody talks about it. Republicans were keen to blame Biden. Democrats chose to blame "greedy" oil companies even though no amount of US production could replace what OPEC had cut. Biden even went to Riyadh to beg MBS to increase production and he refused [6]. And nobody talks about any of it.
That was 10%. The Hormuz closure is 15-20% and also impacts natural gas, helium, fertilizer and a bunch of other things not impacted by the OPEC deal. Oil is being kept at a futures price of ~$100/barrel by record withdrawals from strategic reserves. By early July, those strategic reserves will be empty and there'll be no way to inject oil back into the market other than reopening the Strait. And that will lag weeks because oil container ships move as fast as bicycles.
So think back to the pandemic. Shipping containers 6x'ed. Gas prices went way up. It impacted jet fuel and sea freight. All of that is coming in the next month or two and there's honestly little we can do about it now. If the Strait reopened today, these second and third order effects are already baked in.
This is now a structural repricing event and we're going to see crude oil and gas prices near current levels probably for years.
Oh and oil CEOs are starting to warn about the coming energy shock [7][8] so buckle up.
> By early July, those strategic reserves will be empty
The US SPR is at 365m barrels and has a max withdrawal rate of 4m bpd. Currently they’re withdrawing 9m/week. There is 0 chance reserves are gone by July, just incredibly incorrect.
Peter Zeihan was saying the same about the Russian invasion of Ukraine when that started, since Russia and Ukraine export fertilizer precursors... If there were famines they didn't make the news (but they might not regardless).
The most surprising thing is that the whole world somehow has built dependency on Hormuz which has been known for decades that it is controlled by Iran, an adversarial actor to the west.
Nobody ever thinks of, you know, building redundancy for Hormuz?
(Really neat website, I think it was shared on HN a few months ago?)
There is a lot of other proposed routes but it’s actually pretty hard to create them in that region, lots of actors with their own interests and not the best history of collaboration. And Iran would definitely be against it given it reduces their influence
I’d hardly consider this a side effect. Decreasing traffic in one path within a network of exchange has the direct effect of increasing traffic/demand on alternate paths. Increased demand == increased prices.
There were numerous simulations/war games run by the US and other militaries going back 20, 25, 30 years that basically came to the conclusion that:
a) If Iran was attacked with sufficient severity they would take the step to close the straight of Hormuz
b) Iran was developing or already had small-boat, mine laying, missile and UAV capacity sufficient to do so
c) Iran was actively working on ways to hide this missile, uav, small boat capacity in the general region of the straight of hormuz in hundreds of small locations (down to the size/scale of a civilian small warehouse or garage), making it impossible to air strike/remove all of this capability with any known certainty without causing absurd levels of civilian casualties
d) The only way to remove the missile, small boat, uav capability would be an extremely large boots on the ground and manpower intensive ground based search to hunt it down. You couldn't be sure you could remove the capability strictly from the air.
31 comments
[ 2.8 ms ] story [ 48.5 ms ] threadIf you're an engineer, you've experienced something similar. You come across some code and scratch your head thinking "why did they do it like this?", spend half a day getting rid of it and then find out why it was the way it was.
There are people who understand all these complex systems. We just insist on silencing them, even firing them and then listening to the dumbest people on the planet.
You see this in startups too, even very large ones. I've now spent years watching people in crypto discover why exactly the financial system works like it does while spewing banalities about "disruption". Sometimes new thinking can be good but more often than not it's somewhere between ignorance and a scam, particularly when so much money is involved.
Another classic example: orbital data centers.
It doesn't have to be that way. The Chinese Communist Party is, despite the name, technocratic [1]. Xi Jinping's undergraduate degree is in chemical engineering.
[1]: https://issues.org/perspective-the-benefits-of-technocracy-i...
[1] https://www.thegreatsimplification.com/frankly-original/141-...
$611 for 2x 5 gallon buckets just to do my garage.
6,500,000,000 / (350,000,000 * 0.99) = $18.76
don't spend it all in one place, champ!
First, some context. OPEC/OPEC+ generally set their production to meet demand and to keep oil prices stable. That means they aim for a floor and ceiling on oil prices. Every 3 months they meet and try and anticipate demand. Produce too much and the price is too low. This hurts revenue. Produce not enough and it creates political instabilities, both locally and abroad. It would in particular hurt security guarantees with the US that go back to FDR and King Faisal making an oil-for-security deal in 1945. Now, that doens't mean OPEC members can't and don't cheat. They can and do. But it is generally successful [1].
In January-February 2020 we had the start of the pandemic. A lot of people weren't paying attention or thought it could be contained. That was over by March 2020 and much of the world went into lockdown. A lot of travel just stopped. This had an immediate effect on the oil market. Nobody was buying. Nobody had places to store excess oil. Russia and Saudi Arabia got into an oil price war. And the futures price briefly went negative [2]. This technically was an extreme contango market [3].
So what did the Trump administration do? Well, in my estimation, they panicked. They feared this would be devastating to US oil producers. So then-president Trump went to MBS and cajoled him into getting OPEC to massively cut oil production [4][5]. How much? Initially by 9.7 million barrels per day and then going down over the next 2 years to 6.3 million. That's roughly 10% of global crude oil output.
When I say "panicked", because of the OPEC meetings every 3 months, this would've happened anyway. OPEC would've cut production. The market would've stabilized. Instead, Trump locked OPEC into a 2 year cut and essentially gave them permission to drive up oil prices. And that's exactly what happened. This deal maps pretty much exactly to the pandemic inflation spike.
And nobody talks about it. Republicans were keen to blame Biden. Democrats chose to blame "greedy" oil companies even though no amount of US production could replace what OPEC had cut. Biden even went to Riyadh to beg MBS to increase production and he refused [6]. And nobody talks about any of it.
That was 10%. The Hormuz closure is 15-20% and also impacts natural gas, helium, fertilizer and a bunch of other things not impacted by the OPEC deal. Oil is being kept at a futures price of ~$100/barrel by record withdrawals from strategic reserves. By early July, those strategic reserves will be empty and there'll be no way to inject oil back into the market other than reopening the Strait. And that will lag weeks because oil container ships move as fast as bicycles.
So think back to the pandemic. Shipping containers 6x'ed. Gas prices went way up. It impacted jet fuel and sea freight. All of that is coming in the next month or two and there's honestly little we can do about it now. If the Strait reopened today, these second and third order effects are already baked in.
This is now a structural repricing event and we're going to see crude oil and gas prices near current levels probably for years.
Oh and oil CEOs are starting to warn about the coming energy shock [7][8] so buckle up.
[1]: https://www.macrotrends.net/1369/crude-oil-price-history-cha...
[2]: https://www.congress.gov/crs_external_products/IN/PDF/IN1135...
[3]:
The US SPR is at 365m barrels and has a max withdrawal rate of 4m bpd. Currently they’re withdrawing 9m/week. There is 0 chance reserves are gone by July, just incredibly incorrect.
& this increased commerce all around the globe.
but destroyed due to bad propaganda.
* https://en.macromicro.me/charts/94482/imf-strait-of-hormuz-n...
(screenshot https://images2.imgbox.com/cd/73/yMf1mwKy_o.png )
every 1 single day = another 1 week of misery for the world
100 ships per day now single digits sometimes zero
90 days = 90 weeks
except it's going to be still like this in SIX MONTHS if not all the way through January 2029
wait until Cuba happens some Friday night too
Nobody ever thinks of, you know, building redundancy for Hormuz?
When you have questions like that in mind, the answer is pretty much always „yes, that’s a well known topic of discussion in that field“
You can see alternatives that exist here: https://hormuzstraitmonitor.com/alternative-routes/
(Really neat website, I think it was shared on HN a few months ago?)
There is a lot of other proposed routes but it’s actually pretty hard to create them in that region, lots of actors with their own interests and not the best history of collaboration. And Iran would definitely be against it given it reduces their influence
Not to mention USA investing heavily in fraking to counter balance the middle east...
a) If Iran was attacked with sufficient severity they would take the step to close the straight of Hormuz
b) Iran was developing or already had small-boat, mine laying, missile and UAV capacity sufficient to do so
c) Iran was actively working on ways to hide this missile, uav, small boat capacity in the general region of the straight of hormuz in hundreds of small locations (down to the size/scale of a civilian small warehouse or garage), making it impossible to air strike/remove all of this capability with any known certainty without causing absurd levels of civilian casualties
d) The only way to remove the missile, small boat, uav capability would be an extremely large boots on the ground and manpower intensive ground based search to hunt it down. You couldn't be sure you could remove the capability strictly from the air.